The Globe and Mail recently published an investigative report entitled "Through Canada’s Insurance Loophole" (Saturday, December 18, 2010)

The Globe and Mail recently published an investigative report entitled "Through Canada’s Insurance Loophole" (Saturday, December 18, 2010), on the role of the Managing General Agency or MGA in the distribution of insurance products.

The article goes into great detail on the growth of MGAs and the lack of regulation of this distribution channel.

I was made aware of the article in an email from both Advocis’ Chair and President/CEO.

I am posting my response to them on this blog.

“It has been a long time coming but the opportunity to raise the bar is now here. The conflict in the advisor's role as a professional is exacerbated by the ongoing 30 year disconnect between the insurance companies' 'manufacturer', 'wholesaler', 'retailer' distribution model and the Advocis Professional Practitioner model of service to the consumer. The MGA is a 'wholesaler' and the Financial Advisor is a professional practitioner in the current independent channel. The confusion faced by the consumer is "What is it that I am purchasing? A commodity or professional advice or both?" The insurance industry markets commodities. We market solutions (Rx's) premised on a professional diagnosis. If we are advocates for the consumer it is time for us to ensure that the consumer understands that they have a choice - work with a commodity sales channel or work with a professionally designated practitioner. Until we make this distinction clear to the public they will continue to be at risk. We have an opportunity to bring closure to this longtime dichotomy”.

Dan Zwicker


Daniel H. Zwicker, Principal
B.Sc. (Hons.) P.Eng. CFP CLU CH.F.C. CFSB
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COMMENT


"HOW AN INDUSTRY OUTGREW ITS REGULATORS"
December 24, 2010
From: "Jim Rogers"
To: dmullins@cogeco.ca
CC: danzwicker@rogers.com


Dennis...appreciated--and agree with--your posting earlier today on 'For Advisors Only'.
Here's my letter to the G+M which they published last Monday, following the publication of the first article.
Cheers.
(PS see Dan Zwicker's comments...which I also think are 'spot on'.)


Original Message to Globe & Mail
From: "Jim Rogers"
To: letters@globeandmail.com
Date: 18 Dec 2010


Subject: "How an Industry Outgrew its Regulators"


Having spent over 40 years as an agent working both directly for a single life insurance company and later as an independent, I concur that the 'lack of accountability' problems cited by Tara Perkins and Grant Robertson are pretty well as they have laid out.The solution is, however, simpler than waiting (hoping?) that improved regulation/legislation will solve the problem. Specifically, product manufacturers (i.e the insurance companies) should be held vicariously liable for the actions of both their MGAs and the agents who put their business through these MGAs.Were this so, the insurers would be far more careful about whom they appoint as an MGA in the first place and, in turn, MGAs would do more due diligence around the agents from whom they will accept business. Layered over these relationships would be minimum required amounts of bonding and E+O coverages--designed to protect the aggrieved policy owners from the financial consequences of proven inappropriate advice on the part of an agent.

Jim Rogers
http://www.rogersgroup.com/
From: The Globe & Mail
Dec. 17, 2019

For the entire article:

http://dzwicker.blogspot.com/2010/12/globe-and-mail-recently-published_24.html

EMPLOYEE MINDSETS: CRITICAL TO HIGH PERFORMANCE - HOW EMPLOYEE MINDSETS CAN BE ASSESSED TO IMPROVE BUSINESS PERFORMANCE

Executives instinctively know that employee attitudes and behaviours matter. However, most efforts to measure this key organizational trait have come up short. A new approach promises to change that by helping companies assess employee mindsets most critical to high performance

At a successful US-based biotech firm, plans to grow were robust and expectations were high. But in the winter of 2006, senior executives noticed a number of red flags concerning employee attitudes about the company's ability to execute its aggressive new strategy. For the second year in a row, internal survey results indicated that from middle management on down, people were worried that decision-making speed was dropping, that accountability had become too diffuse, and that more time was being spent on getting consensus than on getting results.
This trend was worrisome: Could it derail the company's growth plans?

The problem faced by the biotech firm is a common one. Employee mindsets—the attitudes, behaviors and practices that determine how an organization approaches tasks critical to the execution of its strategy—are essential to a company's ability to achieve or maintain high performance. The wrong mindsets, such as those at the biotech firm, can compromise these efforts. Many organizations use surveys to measure such facets of employee mindsets as job satisfaction, engagement and learning, but few feel they are able to gauge the impact of these mindsets in a comprehensive, meaningful way. "Blind men and the elephant" is a common phrase managers apply to the problem. Even those that have included assessments of these mindsets in their balanced scorecards learn little that they can use to boost performance.

Senior management may get some information from these efforts that seems like it logically should be linked to high performance, such as "80 percent of our employees are satisfied or very satisfied with their work." But the actual connection—much less a causal relationship—remains unclear. In the absence of a proven linkage, the task of optimizing mindsets to achieve high performance is reduced to guesswork.

Executives frustrated by this dilemma instinctively know that employees mindsets matter. But how? And what can they do to instill winning mindsets?

For more than three years, Accenture has been intensively studying the attributes of high-performance business. We found five critical mindsets that are directly linked to business performance. High performers cultivate these mindsets and translate them into organizational practices that produce superior business outcomes. Once top executives become aware of the connections between mindsets, practices and outcomes, they can begin to leverage culture for better business performance. We refer to this combination of mindsets and practices as an organization's performance anatomy.

We have now developed a comprehensive assessment—the Accenture Performance Anatomy Opportunity Inventory—that shows executives how well (or poorly) mindsets and practices are aligned in their organizations, and help them identify strategic initiatives that will leverage mindsets to create value and achieve high performance. The PAOI also guides efforts to build the next generation of leaders, align top executives around strategic priorities and use hard data to act on soft issues.

Realignment

Here's how the biotech company cited above used the tools of the Performance Anatomy Opportunity Inventory to assess multiple misalignments—to gain a better understanding of what was behind the plummeting execution scores on its internal surveys and, more important, to separate the underlying causes from surface-level symptoms so that the company could successfully implement its growth strategy.

Given the senior leadership team's plan to expand the firm's product line, many changes were on the menu—increased headcount, including the addition of new managers; reorganization; and the formalization of processes. Outstanding execution would be essential to continued market penetration and financial success, but having a lot of new employees in new roles seemed a recipe for even more confusion about decision making and accountability.

The company's Performance Anatomy Opportunity Inventory consisted of a multidimensional investigation that combined qualitative interviews; a survey, sent to everyone in the organization, to gauge the alignment of performance anatomy mindsets; and structured observation, including an organizational network analysis.
The assessment confirmed that company leaders were right to be concerned about execution. The PAOI analysis revealed that although the top leaders had demonstrated a powerful macroscopic view of the market, they were myopic about their own impact on execution inside the organization. In performance anatomy terms, the team's focus on market making and disciplined execution was out of balance, with the scales tipping heavily toward the former.

Consider how attitudes about decision making were found to be misaligned. Interviews with 54 senior and middle managers (out of a total of 80) revealed a widely held belief that the senior executive team was sending inconsistent signals about who had responsibility for making various decisions. Several senior managers complained that the executive team insisted on being kept in the loop on matters great and small, and offered numerous anecdotes to back up their claims.

Results of the assessment confirmed these disconnects between the views of senior executives and the rest of the organization. In fact, the further one went down the hierarchy, the greater the misalignment. The results suggested that top management was out of step with the rest of the organization on other indicators as well. For example, middle- and lower-level employees expressed concerns about their ability to trust senior management and to safely take risks (in the form of offering creative ideas).

Finally, an organizational network analysis—the mapping of the informal organization, which revealed how the company actually worked, including who relied on whom to make decisions, things rarely evident from a formal organizational chart—confirmed that the senior executive team was squarely in the middle of organizational decision making, creating a bottleneck to effective execution. This finding dovetailed with survey results indicating that all but the senior team saw hierarchy as a negative organizational characteristic.

The combination of investigative approaches not only unearthed a serious unraveling of the shared mindsets that had enabled this company to achieve dramatic growth in market share, it also helped management figure out what to do to realign the mindsets. Results from the Performance Anatomy Opportunity Inventory formed the foundation for a data-driven discussion among senior managers about how to address a number of critical issues: decision rights and accountabilities; reformulation of the charter of the senior executive team so that it mirrored the realities of a larger and more complex organization; and how to acculturate new and recently promoted managers so that they could achieve a level of discipline in execution reminiscent of the days when the organization was smaller and far less complex.

Though still a work in progress, the changes brought about by management's review of the results are already having a positive impact. The company's president has said that "the project more than paid for itself by just the savings generated on a handful of decisions, not to mention the impact on the organization's behavior and the preparedness for aggressive growth."

Simple, Actionable Recommendations

The Performance Anatomy Opportunity Inventory that helped this biotech firm move toward superior execution is a multistage, multidimensional tool that produces simple, actionable recommendations.
Four features make it distinctive. First, it is a reliable method for benchmarking organizational mindsets in the critical areas Accenture has identified as constituting a performance anatomy. Second, it shows how widely and deeply the mindsets are shared, from the top team to the front line. Third, where mindsets are not in sync, it identifies opportunities to improve their alignment. Finally, it helps companies set priorities and initiate projects to enhance their performance anatomy.

The PAOI gathers both quantitative and qualitative data in a six-step process. Assessing employee mindsets is too important to be left to approaches that fail to deliver meaningful results. As companies of all sizes and in all industries come to understand the importance of creating and instilling winning attitudes, behaviors and practices, they will need tools like the Performance Anatomy Opportunity Inventory to help them align key mindsets and optimize their performance anatomy.

Sidebar: Why most organizational assessments fail

Whether developed internally or purchased, many tools designed to gauge employee mindsets—their attitudes, behaviors and practices—operate at a surface level. Individual items or questions do not point toward larger constructs or "scales" that accurately reflect an organization's performance anatomy, one of the three building blocks of high-performance business. For example, "Describe the level of satisfaction you have with your work" measures only one thing (in this case, employee satisfaction)—it is not connected to broader aspects of the organization, such as whether employees see IT as a strategic asset, or if they understand company success in terms of carefully chosen measures (two of five key performance anatomy mindsets identified by Accenture).
In addition, most assessments fail to link questions to strategic and measurable objectives, such as using a specific set of metrics to determine whether a company is a top-quartile player in its industry.

Beyond problems with the surveys themselves, assessments often fail for lack of a comprehensive process. That is, they are haphazardly begun and brought to abrupt conclusion without any action being taken. One common result: Problems uncovered by the data are rationalized away—blamed on external factors beyond management control, like a downturn in the economy—or simply ignored for lack of a clear solution.

If senior management is not fully committed to the process at the outset, it may be unwilling to make changes based on the results. Such inaction only leads to employee cynicism over time. As companies have become aware of the costs of dealing with falsely raised hopes, many have simply decided to stop surveying their people.
But the biggest problem with most of these efforts is that they fail to capture the relationship between employee mindsets and business results.

A satisfied and engaged workforce might logically seem to be connected to performance, but it is difficult to prove the connection. In fact, it's just as easy to imagine how satisfaction and engagement may be undermining performance. For example, it's possible for employees to be satisfied with long-established, comfortable routines without being terribly productive.

And it's possible to be engaged—committed to the business, making a serious effort—while occupied with tasks that are not focused on achieving high performance. For instance, an engaged survey-certified manager may spend too much of his time leading marginally useful meetings rather than meeting with customers.
Another difficulty: In many surveys it's impossible to distinguish cause and effect. For example, do engaged employees lead to superior financial results, or is it the other way around? It's hard to blame executives for failing to act when the data at hand are ambiguous.

Accenture
12/04/2010

About the Authors

Robert J. Thomas is the executive director of the Accenture Institute for High Performance Business in Boston, Massachusetts. Dr. Thomas is a leading authority on leadership and transformational change. He is a frequent contributor to Outlook, and his ideas on human capital development have also appeared in Harvard Business Review, Sloan Management Review and The Wall Street Journal. His book Geeks and Geezers, which he co-wrote with Warren Bennis, was one of the best-selling business books of 2002. His new book, Crucibles of Leadership, will be published by Harvard Business School Press this fall.
Fred Harburg is a private consultant who provides guidance in the areas of leadership, strategy and coaching. He has held numerous international leadership positions in Fortune 100 companies and has consulted with many others. He is a member of the external advisory board for the Institute for Global Leadership at Tufts University and is a member of the editorial advi-sory board for Chief Learning Officer, a magazine that includes his bimonthly column on strategy.
Ana Dutra is the Chicago-based managing partner of the Accenture Organization Strategy group. Ms. Dutra has spent more than 18 years in management consulting, working with Fortune 500 clients across multiple industries and helping senior executives develop and execute growth strategies that are aligned with the operating model, culture and leadership of their companies. Recently, Ms. Dutra led Accenture's acquisition of Hagberg Consulting Group, a strategic consulting company specializing in the assessment of organizational culture and its alignment with corporate strategy.

HUMAN CAPITAL STRATEGY AS A BUSINESS DIFFERENTIATOR

As industries around the world turn their attention to a new era of growth, the importance of an enterprise’s human capital has risen dramatically. Acquiring and retaining new customers; generating new ideas; improving productivity: these challenges place new demands on the workforce and those who lead it.


Every company engages in some sort of workforce planning, of course, and has processes in place to source, develop and deploy its people. Yet the economic downturn and the speed of marketplace change have outstripped the ability of traditional talent management programs to meet business needs.


Executives must now pursue a more comprehensive and integrated human capital strategy that includes the management of talent as well as the associated leadership, culture and organization components that multiply the value of talent and create an enterprise that is better able to execute business strategy and adapt to a changing marketplace.


There is urgency here but also opportunity. Those who can effectively translate their business strategy into an actionable human capital strategy can drive a new kind of competitive advantage—one extremely difficult for others to imitate.


Linking business strategy to human capital requirements HR is the corporate function tasked with acquiring, developing and deploying the people needed for an enterprise to be successful. Yet many HR departments struggle to gain a deep enough understanding of how business goals translate into specific workforce and organization needs. What’s missing at many companies is a strong program, led from the top, to articulate the human capital dimensions of a business vision at a strategic level (see chart). Without this human capital strategy, HR can’t see at a broad enough level, and senior management can’t see at a detailed enough level.


An effective human capital strategy helps put in place the right leaders to source, develop and direct the right workforce talent, supported by the right culture, organization and operating model. Work in the human capital dimension underpins many of the company’s most important decisions about where and how to compete. It also supports the enterprise as it balances short-term decisions with longer-term imperatives. In this way, a human capital strategy supports an enterprise in meeting today’s urgent needs while also helping it become agile enough to reposition itself for ongoing market competitiveness and growth.


Creating and implementing a human capital strategy.


A program to create and implement a human capital strategy involves multiple phases of work across four primary work streams—talent, leadership, culture and organization— supported by program management and governance to help guide the entire endeavor.


Talent


The primary activity of the talent work stream is to define the workforce capabilities needed to execute the business strategy. Therefore, the first step is for executives to review the company’s current business strategy to determine not only which specific capabilities are required by the workforce but also what other impacts the business strategy may have on the workforce. Perhaps new approaches to recruiting and hiring are necessary, or the company may need to source talent in different locations.


More detailed workforce planning is then conducted, at which time a company determines the workforce supply it needs—how many people are required for each type of job, now and in the future. The next step is to analyze any potential gap between existing workforce competencies and those needed to execute the business strategy going forward.


If properly designed and executed, programs within the talent work stream of the human capital strategy can significantly contribute to a company’s ability to attain its business goals, and to attract, motivate and retain the right people.


Leadership

The leadership development aspects of an organization’s human capital strategy focus on several key questions:

• What is the specific value that is expected to be delivered by senior leaders?
• Beyond their official job titles, what are the particular outcomes they are expected to produce?
• What attributes, capabilities and behaviors are expected from future leaders?
• How can organizations use leadership development as a competitive advantage?
  
  
  

Companies then must put in place leadership development programs that are closely tied to the needs of the business strategy and the shifting marketplace.


Culture

Executives used to look upon corporate culture as a “soft and fuzzy” area over which they had little control. High-performance businesses, however, don’t see it that way. Today’s senior leaders are increasingly finding that their business strategies stand little chance of being adopted and executed if the current culture of their company impedes the ability to accommodate change and support the business vision.


This work stream of the human capital strategy identifies cultural implications of the business strategy, including whether the corporate culture is aligned with the business strategy. If the culture is aligned, executives must help reinforce those attributes that support the execution of strategy. If the culture is not aligned, then specific programs must be put in place to influence the culture and push it in the right direction.


It is possible to gain a detailed, measurable picture of a corporate culture. GE Healthcare, for example, has been focused on creating a more collaborative and customer-centric culture. The company used Accenture’s Culture Value Analysis methodology to examine six particular characteristics of more open collaboration: teamwork, trust, managing conflict, minimizing political maneuvering, eliminating siloed behavior and openly sharing information across the organization. The diagnosis identified several areas where GE Healthcare could strengthen its collaborative capabilities to take advantage of opportunities for growth.


OrganizationExecutives often overlook the fact that their company’s organization structure and operating model has a profound effect on how effectively people perform on the job. Talent dimensions such as employee sourcing, training, leadership development and culture change cannot be effective if the operating model and organization design interfere with implementation.


From a design perspective, effective reporting structures, financing, operations, budgets, rewards and so forth must be in place. Similarly, the operating model of the business must organize work in an optimal way and then help people act on strategic priorities in proper sequence.


Conclusion:

Sustaining your competitive differentiationThe nature of competition today is shifting across almost every industry. Can companies continue to innovate, and to execute strategy, at the speed required to compete in the marketplace? The answer to that question largely depends on an enterprise’s investments in its human capital assets.


Sourcing and retaining top talent in the right numbers and the right places is a key part of the equation. Equally important, however, are the leadership qualities, cultural characteristics and organization structures that enable workforce talent to help the company as a whole achieve high performance.

Accenture

12/04/2010

About the Authors

David Smith is the managing director of the Accenture Talent & Organization Performance service line.
Yaarit Silverstone is the managing director responsible for human capital and organization effectiveness offerings at Accenture.
Adrian Lajtha is Accenture's chief leadership officer.